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DIRECTIVE No

DIRECTIVE No. 19/2002/CT-TTg OF SEPTEMBER 13, 2002 ON ENHANCING THE MANAGEMENT OF VALUE ADDED TAX

After more than 3 years� implementation, the Value Added Tax (VAT) Law has brought into play its positive effects, overcoming the overlapping tax collection through different business stages, a shortcoming of the former Turnover Tax Law, and concurrently encouraging production development investment and export.

However, in the course of implementation, a number of organizations and individuals have availed themselves of the loopholes in the VAT Law and Enterprise Income Tax Law to compile false dossiers on export goods or set up enterprises to deal in invoices to commit frauds, appropriating the State�s tax money. Though the tax agencies and other functional State bodies have taken many preventive measures, the situation has not yet been definitely and effectively redressed.

In order to promote the VAT�s positive effects, intensify the efficient management thereof, reduce losses, prevent and overcome fraudulent acts in VAT deduction and reimbursement in a timely manner, as well as the setting up of enterprises for illegal trading of invoices, the Prime Minister hereby requests the ministers, the heads of the relevant branches and the presidents of the People�s Committees of the provinces and centrally-run cities to promptly perform the following tasks:

1. The Finance Ministry:

a/ To study and report to the Government for submission to the National Assembly amendments and supplements to the VAT Law. In the immediate future, to submit to the National Assembly Standing Committee for annulment the regulations on input VAT deduction in percentage for goods purchased without VAT invoices for application right from the beginning of 2003.

b/ To guide and well organize the implementation of the Government�s Decree No. 76/2002/ND-CP of September 13, 2002 amending and supplementing a number of Articles of its Decree No. 79/2000/ND-CP of December 29, 2000, which details the implementation of the VAT Law.

c/ To issue documents amending, supplementing and perfecting the regulations on, and procedures for, VAT reimbursement so as to well perform the task of managing tax reimbursement in strict compliance with law provisions.

To enhance the management and inspection of invoice printing, issuance and sale to business establishments, ensuring that only production and/or business establishments can purchase them; intensify the inspection of invoice use, compare and verify invoices; promptly and strictly handle already discovered cases of unlawfully purchasing and/or selling invoices.

d/ To boost the examination and inspection of VAT and VAT reimbursement, especially the tax reimbursement for goods exported through land borders.

e/ To direct the General Department of Customs to intensify measures for strict management and supervision of the inspection and certification of actually exported goods, especially goods exported through land borders, thus stopping the rotation of export goods and sham export.

f/ To enhance the training and education of tax and customs officers in terms of professional qualifications and moral virtues so that they can well perform the tax management task. To intensify the internal inspection, strictly handle irresponsible or negative acts of colluding with or helping taxpayers to evade the State�s tax money.

2. The Ministry of Planning and Investment:

To direct the provincial/municipal Planning and Investment Services to closely coordinate with the tax agencies and relevant agencies in taking measures to strictly manage the enterprises� activities after they are granted business registration certificates, thereby preventing and promptly detecting the setting up of enterprises to trade in invoices and appropriate the State�s properties.

3. The Justice Ministry:

a/ To coordinate with the ministries and branches in evaluating for promulgation legal documents, ensuring the complete and strict implementation thereof.

b/ To study to amend and/or supplement forms and levels of sanctioning administrative violations as well as penalty levels in related legal documents suitable to the nature and seriousness of administrative violations, offenses related to tax invoices, vouchers and fraudulence at present.

4. The Ministry of Public Security:

a/ To direct the local police offices to closely coordinate with the tax and customs agencies as well as the relevant agencies in detecting and preventing in time acts of tax fraudulence and illegal trading in invoices.

b/ To focus direction on stepping up the investigation of, and completion of dossiers on, cases of tax fraudulence or appropriation for timely prosecution, ensuring the justice of law.

5. The State Bank of Vietnam:

a/ To direct banks to take measures for expanding payment via bank accounts, creating favorable conditions for enterprises to open bank accounts and make via-bank payment for exports.

b/ To direct banks to strictly execute the collection and fine orders of the tax agencies.

6. The presidents of the provincial/municipal People�s Committees:

To direct the provincial/municipal Tax Departments, Planning and Investment Services, Finance and Pricing Services as well as relevant agencies in their localities to coordinate with one another in well implementing measures to intensify the management of production and business activities, granting of business registration certificates, market management, tax payment registration, and management of VAT collection and reimbursement.

7. The Supreme People�s Procuracy and the Supreme People�s Court are requested to direct the People�s Procuracies and People�s Courts at all levels to promptly and strictly prosecute and try cases of tax fraudulence, which have been detected and forwarded by the tax agencies and the police.

8. The central and local information and propagation agencies are requested to step up the propagation on VAT, open specialized columns or programs on taxes so that all organizations, individuals and taxpayers understand VAT, thereby actively contributing to the good implementation of the tax legislation. To promptly commend exemplary taxpayers well performing their tax obligations and at the same time condemn acts and subjects of tax fraudulence.

The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government and the presidents of the People�s Committees of the provinces and centrally-run cities shall promptly direct and take specific measures for well organizing the implementation of the contents of this Directive, and report on problems and propose solutions thereto to the Prime Minister and the Finance Ministry.

Prime Minister
PHAN VAN KHAI